The excess reserves conundrum

More pros than cons if RBI's 'excess' capital is used to fund PSU bank recap

The former chief economic adviser to the government, Arvind Subramanian, has stuck to his guns and said that the Reserve Bank of India (RBI) has excess reserves to the tune of Rs 4-4.5 trillion, and some of it should be used to recapitalise banks, provided they are reformed.

In an interview to The Times of India, Subramanian said: “RBI should put the money only for recapitalisation of public sector banks, conditional on all the reforms being undertaken, otherwise it is money down the black hole. I started the excess reserve view a few years (ago). I am pretty confident that